Rubber Futures at Near 3-Week Low

Rubber futures rose to around 225 US cents per kilogram in mid-June, rebounding from a two-week low, supported by persistent supply concerns. Although major producers including Thailand, Indonesia, and Malaysia are in their main tapping season (May–October), which typically boosts overall supply due to more favourable growing conditions, forecasts of isolated but very heavy rainfall across northern Thailand, Myanmar, Laos, and northern Vietnam have raised concerns, as prolonged wet conditions can disrupt rubber tapping and limit short-term output. Meanwhile, a US-Iran peace deal has pushed oil prices lower, which could weigh on natural rubber demand as cheaper crude reduces synthetic rubber production costs, making substitutes more competitive. However, the market is more focused on the potential return of rubber demand from the Middle East following the preliminary agreement to end the war.

Rubber futures eased to around 225 US cents per kilogram, the lowest since late May, pressured by rising supply prospects and weak seasonal demand. Asian natural rubber producers like Thailand, Indonesia and Malaysia are currently in the main tapping season, which typically runs from around May to October. During this period, higher rainfall and more favourable growing conditions enable rubber trees to produce more latex, increasing supply. Supply in the synthetic rubber segment is also expected to rise as Chinese butadiene rubber producers restart operations at higher capacity following maintenance. On the demand side, the automotive market usually weakens in summer as consumers prioritise travel and leisure, reducing tyre demand and weighing on rubber prices.

Rubber futures traded around 230 US cents per kilogram in early June, near the highest level since January 2017, supported by weather-driven supply shortages. The world’s top two rubber-producing countries are expected to see tighter supply due to adverse weather conditions. In Thailand, the meteorological agency has warned of very heavy isolated rainfall in the south, raising the risk of flash floods, while Indonesia’s weather agency forecasts an early onset of dry conditions and below-normal rainfall in June. Despite differing weather patterns, both conditions could disrupt rubber tapping and harvesting activities, limiting output and constraining global supply. At the same time, renewed tensions in the Middle East pushed oil prices higher, adding support. Natural rubber prices tend to move with crude oil because higher oil prices make synthetic rubber more expensive, increasing demand for natural rubber.